The intestinal epithelium is continually exposed to a high concentration of diverse bacteria. In spite of the density of commensal bacteria, the normal intestine is not inflamed. Idiopathic inflammatory bowel disease in humans and animals is characterized by aberrant host-microbial interactions. We wished to understand the mechanism by which the normal epithelium guards against chronic inflammation in the presence of commensal flora and thus understand how this may be perturbed in idiopathic inflammatory bowel disease. Gut commensal flora consists of mixed gram-positive and gram-negative organisms (Naidu et al. 1999; Dunne 2001). The cell wall of gram-negative bacteria contains lipopolysaccharide (LPS), a potent pro- inflammatory molecule (Aderem and Ulevitch 2000). Cellular responses to LPS are mediated by the interaction of LPS with toll-like receptor 4 (TLR4) and transduced via the IL- 1 receptor signaling complex to activate NF-KB and pro-inflammatory cytokine secretion (Zhang et al. 1999; Bowie and O'Neill 2000; Jiang et al. 2000; da Silva Correia et al. 2001). Data demonstrate that a novel, secreted protein, MD-2, is required for TLR4 function (Shimazu et al. 1999; Yang et al. 2000). We hypothesize that the TLR co-receptor MD-2 is normally down-regulated in intestinal epithelial cells limiting pro-inflammatory gene expression in the presence of LPS. We further hypothesize that increased expression of MD-2 in response to Thl cytokines perpetuates bacterial hyper-reactivity in inflammatory bowel disease. We and others have recently described that intestinal epithelial cells are unresponsive to purified, protein-free LPS as measured by NF-KB activation and IL-8 secretion (Abreu et al. 2001; Naik et al. 2001). LPS unresponsiveness in intestinal epithelial cells is due to low expression of TLR4 and MD-2. Preliminary data demonstrate that MD-2 expression is low in normal intestinal epithelial cells in vivo and increased in patients with inflammatory bowel disease. Thl cytokines increase expression of MD-2 and restore LPS responsiveness in intestinal epithelial cells. Cloning of the MD-2 promoter demonstrates that MD-2 is transcriptionally regulated by IFN-y via the STAT pathway. In this proposal, we will explore the molecular mechanisms by which MD-2 is transcriptionally regulated in intestinal epithelial cells and the effect of this regulation on the function of toll-like receptor signaling. The results of our studies have important implications for understanding host-microbial interactions and the inter-relationship between the innate and adaptive immune systems in the gut.